Asian stocks are poised for a rise following statements from Jerome Powell, indicating a likely reduction in interest rates by the Federal Reserve within the year.
With Powell's reassurance, equity futures in Japan, Australia, and Hong Kong experienced an uptick, despite the closure of markets in Hong Kong, mainland China, and Taiwan for a holiday.
In the U.S., a surge towards the end of the trading session led to an increase in the S&P 500 by 0.1% and the Nasdaq 100 by 0.2%. Additionally, a revival was seen in Treasuries, which rebounded from early losses to close mainly higher, buoyed by a slight rally that favored shorter-term securities.
The Federal Reserve's Chair reiterated a cautious stance on adjusting borrowing costs, suggesting that recent inflation data has not significantly altered the economic outlook. This stance has bolstered confidence in risk assets, despite recent skepticism over the Fed's ability to implement the anticipated three rate cuts this year.
Gold prices soared to a new high, surpassing $2,300 per ounce, supported by Powell's openness to rate reductions. Concurrently, West Texas Intermediate crude oil continued its upward trajectory for the fifth consecutive session, standing at approximately $85 per barrel.
The aftermath of Taiwan's most severe earthquake in 25 years, which resulted in at least nine fatalities and impacted semiconductor production, is under scrutiny. Taiwan Semiconductor Manufacturing Co. (TSMC), a crucial chip supplier to companies like Apple Inc. (AAPL, Financial) and Nvidia Corp (NVDA, Financial), managed to evacuate staff without sustaining significant damage to essential equipment.
The Japanese yen remained stable as Makoto Sakurai, a former Bank of Japan board member, hinted at a potential interest rate hike around October. Meanwhile, a measure of the dollar's strength experienced its most significant drop in two weeks.
Despite a positive outlook for a gentle U.S. economic landing, Morgan Stanley's global investment committee notes that stock investors' expectations may be overly optimistic. This scenario presents an opportunity to explore investment avenues beyond the S&P 500.
There appears to be a sustained interest in U.S. stocks, with Citigroup Inc. strategists suggesting potential for the market rally to resume after a recent downturn. This is supported by the addition of over $16 billion in net long positions to S&P 500 futures and net inflows into exchange-traded funds.
Investors are also keeping an eye on key economic indicators and central bank officials' speeches scheduled for the week, including Eurozone retail sales and U.S. unemployment figures.
